Midwich (MIDW) closed out 2018 with an expanded balance sheet, improved margins and sales up 21.4 per cent at constant currencies. The group, a distributor of audio-visual (AV) equipment, revealed a significant increase in inventories and receivables, both a reflection of complementary acquisitions and sales growth in its existing operations.
The balance sheet may have expanded but remains in good trim, with the net debt/cash profit ratio unchanged from the prior year at 0.8. Financial performance was aided by an increase in the cash conversion rate from 83.4 per cent to 91.9 per cent – well in advance of the long-term average.
Profitability was on the rise despite a disproportionate increase in distribution and admin costs over revenue. The gross profit margin increased by a full percentage point to 16.5 per cent, partly on an improved product mix, but also a reflection of the effective integration of the businesses acquired in 2017 (Earpro, van Domburg and Sound Technology). Following the period-end, the group expanded its European footprint via deals to acquire MobilePro AG, a Swiss value-added distributor of AV products and Prase Engineering SpA, an Italian distributor with sales of €20.4m (£17.4m) in 2017.
Berenberg gives adjusted profits of £34m this year, leading to EPS of 31.3p, rising to £36m and 33.4p in 2020.
| MIDWICH (MIDW) | ||||
| ORD PRICE: | 575p | MARKET VALUE: | £457m | |
| TOUCH: | 575-595p | 12-MONTH HIGH: | 710p | LOW: 478p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 68p* | NET DEBT: | 44% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 (Jade 320 Ltd)* | 281 | 7.3 | na | nil |
| 2015 (Jade 320 Ltd)* | 314 | 8.6 | 7.1 | nil |
| 2016 | 370 | 12.1 | 10.9 | 8.62 |
| 2017 | 472 | 18.9 | 17.1 | 13.82 |
| 2018 | 574 | 21.1 | 18.5 | 15.20 |
| % change | +22 | +12 | +9 | +10 |
| Ex-div: | 16 May | |||
| Payment: | 21 Jun | |||
| *Pro-forma figures for previous holding companies. **Includes intangible assets of £35.9m, or 45p a share. | ||||
